The central government has called off the expression of interest (EoI) process for divesting its stake in the state-run refiner Bharat Petroleum Corporation Limited (BPCL). In a statement on Thursday, the Department of Investment and Public Asset Management (DIPAM) noted that the decision came after interest buyers backed out due to shocks in the oil and gas industry due to the Covid-19 waves and Russia-Ukraine war.

In March 2020, Centre had invited bidders to come forth with their EoIs for strategic disinvestment of 1,14,91,83,592 equity shares of BPCL, which constitutes 52.98% government stake in the oil company. The Covid-19 pandemic had struck right after the global invitation for the EoI process was sent out.

The government had extended the submission date for EoIs multiple times considering the constraints faced by potential bidders due to the global health crisis. In response to the invitation, several EoIs were received from interested parties too, and qualified interested parties (QIPs) had even initiated due diligence on BPCL.

“However, the multiple Covid-19 waves and geo-political conditions affected multiple industries globally, particularly oil and gas industry. Owing to prevailing conditions in the global energy market, the majority of QIPs have expressed their inability to continue in the current process of disinvestment of BPCL,” DIPAM discloses in its statement.

“In view of this, based on decisions of the alternative mechanism (empowered group of ministers) Government of India has decided to call off the present EoI process for strategic disinvestment of BPCL and the EoIs received from QIPs shall stand cancelled,” it further adds.

The government’s plans to sell its stake in BPCL, however, remain intact. A decision on the re-initiation of the strategic disinvestment process of the company will be taken in due course based on review of the situation, assures DIPAM.

BPCL, after the golden goose LIC and the loss-making Air India, is crucial to fulfilling the government's ambitious disinvestment plan. In the Budget 2022, the government has pegged its disinvestment receipts at ₹65,000 crore, after missing the target by a wide margin in the last fiscal and raking in only ₹13,531 crore.

As investor interest in BPCL dwindled, recent reports had suggested that the government had put the disinvestment process on hold as a single bidder remained in fray out of five to six who had sent EoIs. Other reports suggested that the government was planning to sell only a quarter of its stake in BPCL after failing to attract enough buyers.

Fortune India had earlier reported that the central government was facing difficulties in convincing the shortlisted bidders to submit financial bids for privatisation of BPCL due to their concerns on climate change and energy transition. Bidders were adamant about a favourable ESG rating before putting in money, a senior DIPAM official had told the publication.

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